Manufacturing Advisory Service Barometer reveals SME confidence at 12-month high

Growth prospects amongst West Midlands manufacturing SMEs is at a 12-month high according to the latest Manufacturing Advisory Service (MAS) Barometer, which revealed almost three quarters of companies are expecting to increase sales over the next six months.

Growth prospects amongst West Midlands manufacturing SMEs is at a 12-month high according to the latest Manufacturing Advisory Service (MAS) Barometer, which revealed almost three quarters of companies are expecting to increase sales over the next six months.

There was equally positive news on recent performance, with 51 per cent of the 107 firms who responded reporting a rise in sales turnover - an increase of ten per cent on the pevious quarter - whilst 92 per cent of manufacturers are looking to take on staff or keep workforce levels the same.

As regards investment 46 per cent revealed they were planning to channel cash into new technologies while 60 per cent said they intended to invest in new machinery and premises.

In response to the barometer’s special focus, more than half of firms (57 per cent) quoted poor profit margins as the main issue, followed by an inability to meet lead times (27 per cent) and design specification (24 per cent).

Lorraine Holmes, area director for MAS in the North and West, said: “If you compare findings with the similar period in 2012, you will see that firms are a lot more optimistic, with most key performance responses measured showing positive improvements.

“There appears to be a greater appetite from SMEs for investment in order to remain competitive and I think we are also seeing a desire to create jobs to meet expected demand.”

“The barriers to new opportunities are also interesting. Poor profit margins and lead times both paint a potential picture of unrealistic customer expectations and it appears that manufacturers are favouring a more pragmatic approach to taking work on.

“An inability to meet design specification and issues with equipment capability were also quoted as possible barriers and this could underline the renewed desire for investment in new machinery and technology.”

The second MAS Barometer of 2013 collected responses from manufacturing SMEs across the region providing an overview of economic conditions and issues faced by the sector from January to March this year.

The Rical Group, located across four sites in the Black Country and Birmingham, which supplies fine blanked, precision pressed and die cast metal components, anticipates growth underpinned by an increase in its order pipeline and enquiry levels.

“We’ve certainly benefited from the change in focus to re-shoring and, in the last year alone we have secured a number of contracts that had previously been offshored for manufacture in India and China,” said Paul Bale, Rical Group’s chief operating officer.

“Customers are increasingly looking at local sourcing to reduce issues around quality and failure to meet demanding lead times. The actual landing cost of a part being produced in the sub-continent is also going up by the day, making the UK a lot more attractive proposition to buyers.”